Correlation Between Clicks and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Clicks and Shoprite Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Clicks and Shoprite Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clicks and Shoprite Holdings, you can compare the effects of market volatilities on Clicks and Shoprite Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Clicks with a short position of Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clicks and Shoprite Holdings.
Diversification Opportunities for Clicks and Shoprite Holdings
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clicks and Shoprite is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Clicks and Shoprite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings and Clicks is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Clicks are associated (or correlated) with Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of Clicks i.e., Clicks and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Clicks and Shoprite Holdings
Assuming the 90 days trading horizon Clicks is expected to generate 0.88 times more return on investment than Shoprite Holdings. However, Clicks is 1.14 times less risky than Shoprite Holdings. It trades about 0.1 of its potential returns per unit of risk. Shoprite Holdings is currently generating about 0.07 per unit of risk. If you would invest 2,453,783 in Clicks on August 31, 2024 and sell it today you would earn a total of 1,538,817 from holding Clicks or generate 62.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clicks vs. Shoprite Holdings
Performance |
| Timeline |
| Clicks |
| Shoprite Holdings |
Clicks and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clicks and Shoprite Holdings
The main advantage of trading using opposite Clicks and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clicks position performs unexpectedly, Shoprite Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.| Clicks vs. Afine Investments | Clicks vs. RCL Foods | Clicks vs. Frontier Transport Holdings | Clicks vs. Astoria Investments |
| Shoprite Holdings vs. Harmony Gold Mining | Shoprite Holdings vs. Deneb Investments | Shoprite Holdings vs. City Lodge Hotels | Shoprite Holdings vs. Zeder Investments |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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